February 21, 2024

ABA: Bank Economists Express Cautious Optimism About Credit Conditions in 2024

The latest summary of ABA’s Credit Conditions Index examines a suite of indices derived from the quarterly outlook for credit markets produced by ABA’s Economic Advisory Committee (EAC). The EAC includes chief economists from North America’s largest banks. Readings above 50 indicate that, on net, bank economists expect business and household credit conditions to improve, while readings below 50 indicate an expected deterioration.

The Credit Conditions Index improved to its highest level in six quarters as EAC members expressed cautious optimism about the prospects for the U.S. economy this year, according to the Q1 2024 report:

“ABA’s latest Credit Conditions Index indicates that the economy is on solid footing, and banks intend to continue prudently extending credit to both consumers and businesses,” said ABA Chief Economist Sayee Srinivasan. “The prospect of lower interest rates later this year should boost confidence and credit demand to sustain business growth. However, banks will remain vigilant should signs of unexpected weakness develop.”

For the first quarter release:

Read the full report with detailed charts and a discussion of the broader economic context.

About the Credit Conditions Index 

The ABA Credit Conditions Index is a suite of proprietary diffusion indices derived by the American Bankers Association from surveys of bank chief economists from major North American banking institutions. Since 2002, the bank economists have forecasted credit quality and availability for both businesses and consumers, indicating whether they expect conditions to improve, hold steady, or deteriorate over the ensuing six months. Readings above (below) 50 indicate that, on net, these expert business analysts expect credit market conditions to improve (deteriorate). Input from the bank economists is equally weighted in the indices. This data will remain anonymous, but historical index values are available upon request.

Answers to Frequently Asked Questions about the ABA Credit Conditions Index can be found in an Appendix attached to the outlook. This report and all previous reports can be found at https://www.aba.com/news-research/research-analysis/aba-credit-conditions-index.

This post was originally published here.